The Bank of Lithuania has shown an interest in Central Bank Digital Currency (CBDC) and its potential benefits. These benefits span across easier access to money and reduced fees for cross border payments. Aistė Juškaitė, the bank’s economist while in an interview with Thepaypers on January 30, 2020, said CDBC has the potential to impact the financial system significantly.
Bank of Lithuania Shows Interest In CBDC
The Bank of Lithuania is exploring CBDCs and its potential benefits to the financial system. Aistė Juškaitė while in an interview revealed that academic and financial institutions have shown great interest in CBDCs. And CBDCs have the potential to impact the financial system significantly.
Some potential benefits of CBDC, in Juškaitė’s opinion, include its use in countries with an underdeveloped banking system. Also, digital currency could help in remote areas where ATMs run out of cash regularly or are hard to access. In this case, CBDCs could serve as an alternative to cash. Another benefit that was noted, is the potential of CBDCs to reduce the high fees charged during remittances. The asset could reduce cross border costs while increasing payment efficiency.
Furthermore, the Bank of Lithuania economist noted that central banks around the world have taken positive steps to look into CBDCs. Specifically, China is at the forefront of countries that have shown an interest, while the Swedish Riksbank is exploring the idea of digital currency. Whereas, Lietuvos Bankas has launched blockchain-based projects.
Private Sector’s Interest in Addressing Limitations in Financial System
On the other hand, the economist outlined that it is understandable that companies in the private sector are making attempts to address the limitations in the traditional financial system. The latter relates to Facebook’s intended launch of Libra, a global currency. Despite these efforts, Juškaitė outlined that it is the duty of official financial institutions to promote these changes, which could yield more benefits for society.
Of recent, more central banks are looking to launch CBDC, that could significantly speed up transfers and reduce transaction fees. Six major central banks including the European Central Bank, the Bank of Japan, the Bank of Canada, the Bank of England, the Sveriges Riksbank and the Swiss National Bank formed a working group. Their aim is to discover the use cases of CBDCs.
Private banks have not been left out since they’ve forged on to launch blockchain-based digital assets. JP Morgan, for instance, launched JPM coin in 2019, to facilitate swift transfers between institutional clients. And Julius Baer recently announced the expansion of digital services offering to its clients.